16th Jan 2024 11:24
(Alliance News) - CAB Payments Holdings PLC on Tuesday said its 2023 total income was higher than consensus, in what could be the "start" of the cross-border payments and foreign exchange firm winning back investor confidence.
CAB said total income in 2023 is expected to have risen 25% from the GBP109.4 million achieved in 2022. Broker Liberum noted this implies a total income of GBP137 million, beating consensus of GBP132 million.
"The company continues to benefit from the structural shift in its markets from incumbent providers to specialists such as CAB Payments. The company has a high quality and growing customer base, made up of G10 government entities, some of the world's best known international development organisations, global remittance companies, emerging markets financial institutions and, increasingly, major market banks," CAB said.
"CAB Payments has laid out a clear strategy to grow its customer base, expand its presence to new markets and broaden its product offering."
In October, the firm predicted total income to be "at least" 20% ahead of the GBP109.4 million achieved in 2022. That outlook was about "17% below previously issued guidance", however, CAB added.
"In recent weeks, the company has seen a number of changes to the market conditions in some of its key currency corridors, on top of the ongoing uncertainties surrounding the naira, which are impacting both volumes and margins; most notably, the Central African franc and West African franc. At the present time, these market conditions are compressing margins and reducing trading volume," CAB warned at the time.
The naira is the currency of Nigeria. The Central African franc is used in Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea and Gabon. The West African franc is used in Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.
Shares in the company plunged 72% on October 24, the day of the guidance cut.
The stock floated in July at GBP3.35 per share, giving it a market capitalisation on admission of GBP851.4 million.
Shares in the company fell 4.2% to 92.60 pence each in London on Tuesday morning, down over 70% from its initial public offering price.
However, analysts at Liberum believe Tuesday's update is the "start of CAB rebuilding trust with the market".
"As important, management remains confident in the growth opportunity that lies ahead. Given the significant volume of stock traded since October's warning, we believe that the shareholder register has reset. Combined with the consensus beat, we therefore believe the stock has found a floor. The market will now be focused on the prelims and the new guidance to be given then, specifically FY24 and any revisions to the medium term guidance from the time of the IPO," Liberum analysts added.
The company is slated to release annual results on March 26.
Liberum analysts added: "We continue to believe that CAB is a good business, with a clear proposition addressing customer pain points in a large addressable market, with customer traction remaining a noticeable and positive feature."
By Eric Cunha, Alliance News news editor
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